Dow Jones industrial average drops 120 points as investors close out 2009

NEW YORK – The stock market has closed out a remarkable 2009 with a loss as investors bet the improving economy will lead the government to pull back on its stimulus measures. But stocks still managed their best year since 2003 as they recovered from the financial crisis and recession.

Thursday’s trading, which came on extremely light pre-holiday volume, was a fitting end to a tumultuous year. Stocks fell to 12-year lows by early March on investors’ increasing pessimism, then rallied on growing signs of recovery in what turned out to be Wall Street’s biggest comeback since the Great Depression. In the last day of the year, more signs of healing first pleased investors, and then had them concerned about the economy’s ability to thrive without government help.

View full sizeAssociated Press photoThe New York Stock Exchange Christmas tree is covered in snow on the final trading day of 2009, Thursday, in New York. The thin volume exaggerated the market’s moves. According to preliminary calculations, the Dow Jones industrial average fell 120.46, or 1.1 percent, to 10,428.05. For the year, the Dow rose 1,651.66, or 18.8 percent.

The broader Standard & Poor’s 500 index, considered by professionals to be the market’s best barometer, fell 11.32, or 1 percent, to 1,115.10. The S&P ended the year with a gain of 211.85, or 23.5 percent.

Meanwhile, the Nasdaq composite index fell 22.13, or 1 percent, to 2,269.15. Powered by the recovery in high-tech stocks, the Nasdaq ended 2009 with a gain of 696.12, 43.9 percent.

Those statistics are dwarfed by the indexes’ recovery from the depths of last March, when they bottomed out at 12-year lows. The Dow rose 3,881.00, or 59.3 percent from its March 9 close, while the S&P 500 rose 438.57, or 64.8 percent, and the Nasdaq regained 1,000.51, or 78.9 percent.